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Fourth-Quarter US Worker Productivity Was Excellent; Weekly Unemployment Claims Increased

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Job Seekers In U.S. 2023: Applicants For Free Labor Photo From: iStock

The fourth quarter saw greater than anticipated growth in U.S. worker productivity, which helped to manage unit labor costs and provided the Federal Reserve with further ammunition against inflation.

Increase In Labour Cost

The Labor Department’s Bureau of Labor Statistics said on Thursday that nonfarm productivity—which calculates the hourly output per worker—rose at an annualized pace of 3.2% over the previous quarter.

The third quarter’s data was revised downward, revealing that productivity increased at a still strong 4.9% annual pace rather than the previously stated 5.2%. Reuters questioned economists, and their predictions for productivity growth were 2.5% annually.

Unit labor expenses, or the cost of labor for each individual unit of output, increased by 0.5% following a 1.1% decrease in the July–September quarter.

Reduction In Wage Inflation

The study was released in response to the revelation on Wednesday that salaries increased in the fourth quarter at their slowest rate since 2021.

Unemployment

Source- CNBC

On Wednesday, the US Federal Reserve maintained its current interest rate policy. Jerome Powell, the chairman of the Federal Reserve, told reporters that “we believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”

Since March 2022, the Fed has increased its policy rate by 525 basis points, bringing it to the present range of 5.25%–5.50%. Additionally, there is a gradual loosening of the labor market, which may further reduce wage inflation.

Initial applications for state unemployment benefits increased by 9,000 to a seasonally adjusted 224,000 for the week ending January 27, according to a separate report released by the Labor Department on Thursday. For the most recent week, 212,000 claims were predicted by economists.

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